Risks, rewards in Obama's BP push

President Barack Obama’s plan to demand that BP put money aside for an independent panel to pay out damages could finally let him demonstratively assert his leadership in the deepening oil spill crisis – or again show just how little sway the government has over the company charged with cleaning up its own mess.

The plan, first reported by POLITICO Sunday, came as pressure has built from Gulf Coast governors and others to press the oil giant to cover not only the cost of the cleanup, but also the broader economic damage caused by the runaway offshore well.

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Environmental lawyers and other experts say the move to involve a third party is largely unprecedented, and no one is clear exactly how much authority the White House will be able to legally wield over BP.

On Monday, Senate Democrats are expected to join Obama’s call for the creation of an escrow account in a letter to BP CEO Tony Hayward. A draft of it calls for the establishment of a $20 billion account to be administered by an independent party which will pay for the claims that continue to roll in against BP.

“The question for the White House is, can they force BP to do it,” said Daniel J. Weiss, senior fellow at the Center for American Progress, a think tank run by former Clinton White House chief of staff John Podesta.

The idea of an escrow account was broached just days after the spill by CAP in an opinion piece in POLITICO calling on BP to put their entire first quarter profits - $5.6 billion – directly into the escrow account. Sen. George LeMieux (R-Fla.) sent a letter to BP CEO Tony Hayward in May calling on the company to “open its coffers” and put aside at least $1 billion.

Money in escrow would give the company an incentive to pay claims quickly, Weiss said, which was a problem after the Valdez oil spill off the coast of Alaska, as thousands of claimants died as Exxon held up their claims in court for years.

Gulf governors have also pressed for a streamlined claims process, and for BP to repay them for the secondary costs of the spill, such as its impact on tourism and lost wages and tax revenue from the oil workers put out of work by the federal moratorium on deep water drilling implemented after the spill– a goal that would likely be aided by a third-party system for determining payouts.

“The way the claims process works today is that the Coast Guard is supposed to manage and implement it, but on the other hand, BP is going to make the determination of what claims are paid,” Alabama Gov. Bob Riley, a Republican, said Sunday on CNN’s “State of the Union.” “I don’t think there can be a dividing line. I don’t think you can say one group [of people] can get it and another won’t…The whole economy is based on the tourism market, and when it goes away, someone has to compensate.”